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Monday, August 09, 2010

Thinking Ahead IT Strategy

Valuable survey by McKinsey titled “The next frontier in IT Strategy“. Senior IT executives now believe that they are successfully aligning IT strategy with the needs of businesses they serve. Finally, IT executives are collaborating with business organizations to identify ways to make IT add business value. It’s a sign that displays IT departments are moving away from tactical IT infrastructure management. Though IT infrastructure is important, from business organization’s perspective, infrastructure management itself is a cost overhead. With that mind set, there is always a pressure to drive down IT costs. Only when IT plays an important role in enabling business strategy, it will have a greater chance of getting better funding. IT department can also ascertain gravitas in the boardroom in getting the right resources for innovations.
IT can and must play an important role in aligning with the organization’s business strategy for it to be relevant. I am beginning to believe that tactical Infrastructure Management can be outsourced or a third party SaaS (Software as a Service) delivery model can be used. This will free up internal IT department to work on projects and applications that will create and sustain competitive advantage for their company. Ironically, trend makers in this case are SME organizations.


Survey by McKinsey Quarterly as published in May 2007, suggests that most of the CIOs believe that they are successfully aligning IT strategy with the needs of the businesses they serve.  This means CIOs are collaborating with the business in ways that add significant value, rather than just reacting to the demands of the business.
I know this is an old survey, but the important item from this article is the McKinsey framework for IT Strategy (see below)
itstrategyframework.bmp
IT organizations that have mastered the art of business collaboration may be poised to move to a more advanced form of strategic planning, a level at which they can truly show the business how, where, and when to use IT as a competitive weapon according to the survey.
Survey also finds that IT strategy in most companies has not yet reached its full potential which involves exploiting innovation to drive constant improvement in the operations of a business and to give it a real advantage over competitors with new products and capabilities.
This shift to the next level of IT strategy will require changes in management and budget priorities, as well as multiyear planning, which less than two-thirds of our survey respondents acknowledge doing. To use IT as a competitive weapon, a company must look beyond the annual planning cycle and take an integrated, midrange view of technology, competitive developments, and the strategic actions required to address them.   I think these findings are critical and I think even after 2 years since survey, most of the IT department have not made significant progress in this area.

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